Correlation Between Binhthuan Agriculture and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Ducgiang Chemicals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Binhthuan Agriculture and Ducgiang Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binhthuan Agriculture Services and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Binhthuan Agriculture and Ducgiang Chemicals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Binhthuan Agriculture with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Ducgiang Chemicals.
Diversification Opportunities for Binhthuan Agriculture and Ducgiang Chemicals
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Binhthuan and Ducgiang is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and Binhthuan Agriculture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Binhthuan Agriculture Services are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Ducgiang Chemicals
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 0.59 times more return on investment than Ducgiang Chemicals. However, Binhthuan Agriculture Services is 1.7 times less risky than Ducgiang Chemicals. It trades about 0.16 of its potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about -0.04 per unit of risk. If you would invest 380,000 in Binhthuan Agriculture Services on September 2, 2024 and sell it today you would earn a total of 13,000 from holding Binhthuan Agriculture Services or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| Binhthuan Agriculture |
| Ducgiang Chemicals |
Binhthuan Agriculture and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Ducgiang Chemicals
The main advantage of trading using opposite Binhthuan Agriculture and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Ducgiang Chemicals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| Binhthuan Agriculture vs. Ba Ria Thermal | Binhthuan Agriculture vs. Vietnam Dairy Products | Binhthuan Agriculture vs. Hochiminh City Metal | Binhthuan Agriculture vs. Investment and Industrial |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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